Here Comes “Going Postal” The Sequel: US Postal Service To Cut 120,000 Jobs To Avoid Bankruptcy
by Tyler Durden
That the US postal service is on the verge of bankruptcy is well-known by now and was discussed by Zero Hedge long before it became mainstream news. Furthermore, as we previously noted, the key sticking point in cost reduction negotiations is the labor force compensation (80% of all costs), which is paid an average of $41.15 an hour, and which is over 60% unionized. As of today, we finally welcome the USPS to reality which has announced that, in an attempt to avoid bankruptcy, it is now seeking to reduce its total overhead by 20%, or a whopping 120,000 workers (a number which would amount to roughly an increase of 0.1% in the national unemployment rate). Ah yes, but this is prohibited by existing union contracts. Furthermore, WaPo writes that “SPS also wants to withdraw its employees from the health and retirement plans that cover federal staffers and create its own benefit programs for postal employees.” Good luck trying to convince a labor union that cutting an ungodly amount of jobs is for the greater good. Alas, what happened in Greece (and what is about to happen in Italy) will be nothing compared to what will happen when the entire post office goes, well, postal.
This major restructuring of the Postal Service’s relationship with its workforce would need congressional approval and would face fierce opposition from postal unions. But if approved, eliminating contract provisions that prevent layoffs and quitting the federal employee health and retirement programs could have ramifications for workers across the government and throughout the national’s labor movement.
In a notice to employees informing them of its proposals, with the headline “Financial crisis calls for significant actions,” the Postal Service said “we will be insolvent next month due to significant declines in mail volume and retiree health benefit prefunding costs imposed by Congress.”
The Postal Service plan is described in two draft documents obtained by The Washington Post. A “Workforce Optimization” paper acknowledges “that asking Congress to eliminate the layoff protections in our collective bargaining agreements is an extraordinary request by the Postal Service, and we do not make this request lightly. However, exceptional circumstances require exceptional remedies.
“The Postal Service is facing dire economic challenges that threaten its very existence. . . . If the Postal Service was a private sector business, it would have filed for bankruptcy and utilized the reorganization process to restructure its labor agreements to reflect the new financial reality.”